I think I am going wrong on IPtables part. Could help me figure out what is wrong in above setup.

Correct, The traffic will be getting through the Amazon Security Group, but then getting blocked by IPTables. You need a forward rule that will accept the NAT'd traffic:

iptables -A FORWARD -p tcp -m tcp -d 10.0.1.132:80 -j ACCEPT

Note that -A may not be correct, you might need to -I (insert) then provide a number after "FORWARD" which represents where in your FORWARD chain you want to insert the rule. (ie before any DROPs) You can list your FORWARD chain with